MT. JULIET -- Despite a lawsuit that the Wilson County school board has filed against the City of Mt. Juliet to recover $449,000 in past-due liquor-by-the-drink (LBD) tax assessments, the board and the city are still trying to negotiate a settlement, according to Mt. Juliet officials.

The past-due taxes could legally be offset partially or completely by various concessions and contributions that Mt. Juliet has made to the Wilson school system, city officials noted this week, and they’re asking the school board to accept some sort of lower total.

The school board filed the suit last week in Wilson County Chancery Court, but both sides say that was basically a formality to keep the issue in Wilson County.

After June 1, the suit only could have been filed in Nashville under a new state law setting a deadline for filing suits about past-due LBD taxes, explained Kenny Martin, Mt. Juliet city manager.

“They filed so if it got that far, it would keep it in Wilson County,” Martin said. “It’s just what they needed to do to get it on the table.”

Cities and counties are required to share half of their LBD tax receipts with their local school systems, and Mt. Juliet has been paying its share to Wilson County schools regularly since the requirement was brought to the city’s attention, Martin pointed out.

The past-due $449,000 is money that was not paid before the city was alerted to the requirement, Martin added.

“There was no intent to overlook anything,” he said. “As I understand, there are numerous cities throughout the state with similar problems.”

In the past, Mt. Juliet has agreed to waive building fees and build new roads for the schools when they were needed.

Now the city wants the school board to consider that and offset all or part of the city’s LBD tax debt, according to Mayor Ed Hagerty.

“We saved them money by waiving building fees. Lebanon and Watertown didn’t, but we did,” Hagerty said. “If we had been paying the tax, I don’t know if we could have afforded to do that.”

(Lebanon City Council recently approved an agreement with the school board to pay the city’s share of the LBD tax in 10 equal payments of $81,121.52 for a total of $811,215.25.)

Similarly, District 4 City Commissioner Jim Bradshaw, who also represents Mt. Juliet on the County Commission, thinks it would only be fair play to compromise.

“I think the county should take into consideration what we’ve done for the schools,” he said. “Meet us halfway, is what I say.”

City officials didn’t expect a return for the building-fee waivers, since they were unaware at the time of the requirement to share LBD taxes with the school system. But now they’re asking that their assistance be considered.

“The city administration, past and present, wanted to do what it could for the schools,” Martin said.

A bill that Gov. Bill Haslam recently signed into law allows such offsetting of some of the tax sharing.

According to an email from City Attorney Gino Marchetti, the new law says “a city that owes a county school system LBD taxes may, with the agreement of the county, offset the city’s liability in whole or in part by past, present or future expenditures made by the city to benefit the school system.”

Martin said that under the new law Marchetti described, Mt. Juliet has a valid claim to receive credit for its past fee waivers and expenditures on behalf of the school system.

“Since the law says the city should be entitled for things done in the past,” he said, “we want them to offset part, if not all, of the bill.”

According to figures compiled by Martin’s office, the city has waived $397,275 in fees and spent an additional $3.7 million for road construction on Golden Bear Parkway, even though the new Mt. Juliet High School, which is located on Golden Bear Parkway, is outside the city limits.

“Our police officers answer any calls the school has, even though it’s outside the limits,” Martin added. “And we fill in for the school crossing guards if they’re ill.”

Martin also pointed out that other businesses locating in the city have to pay the fees and do their own road improvements and upgrades.

“For the schools, we do it,” the city manager noted.

But he added, “Based on the spirit of what we did, we feel since the law allows it and even recommends it, the county should consider what we saved them. At the end of the day, it’s all taxpayers’ money.”